The Bach Company provides the following standard and actual costs relating to material price and labor usage. $$\begin{array} { l c c }
\text { Item to Classify } & \text { Standard } & \text { Actual } \
\text { Material Price } & 8.50 \text { per gallon } & 8.35 \text { per gallon } \
\text { Luabor Usage } & 30,000 \text { hours } & 28,500 \text { per hour }
\end{array}$$ Based on the above information,which statement is correct?
A) Both the material price variance and the labor usage variance are unfavorable.
B) Both the materials price variance and the labor usage variance are favorable.
C) The labor usage variance is unfavorable.
D) The materials price variance is unfavorable.

Question

The Bach Company provides the following standard and actual costs relating to material price and labor usage. $$\begin{array} { l c c } 
\text { Item to Classify } & \text { Standard } & \text { Actual } \
\text { Material Price } & 8.50 \text { per gallon } & 8.35 \text { per gallon } \
\text { Luabor Usage } & 30,000 \text { hours } & 28,500 \text { per hour }
\end{array}$$ Based on the above information,which statement is correct?
A) Both the material price variance and the labor usage variance are unfavorable.
B) Both the materials price variance and the labor usage variance are favorable.
C) The labor usage variance is unfavorable.
D) The materials price variance is unfavorable.

Quizplus · Accepted Answer

The material price variance is favorable because the actual price per gallon ($8.35) is less than the standard price ($8.50), indicating cost savings. The labor usage variance is also favorable because the actual hours worked (28,500 hours) are less than the standard hours (30,000 hours), indicating efficiency in labor usage.

The Bach Company Provides the Following Standard and Actual Costs